API Design-Thinking
Building-Block Business Model Metrics
Imagine what you could build if you conceived API’s as puzzle-pieces.
Consider building the core components of your startup’s business model by leveraging API access to popular network platforms. Companies like Uber, Expedia, and Coca-Cola attest to the utility of API capabilities to produce innovative products and services. Explore how you can integrate the building-block nature of API’s into your startup’s core technology.
As you discover the thousands of accessible API services available on the web, you may be inspired to solve a daily problem people experience. When you start your business, you must operate it as a tech startup, which requires a unique set of metric variables to monitor. Take a look at some of the highest-priority metrics you should consider when building your tech business.
Network Effect Metrics
Engagement–Track visitors’ engagement with your content using a unique metrics based on demographics and periodic pace. It’s common for startups to measure engagement according to ‘followers’ and ‘friends.’
Interaction—Track visitors' interaction with each other and your brand using customer management software that allow your company to target your most active users. It’s common for startups to base interaction on a weighted-average percentage of content reposts across all social media distribution channels.Virality Metrics
Viral Coefficient—Discover the speed at which your product spreads from one user to another by calculating the k-value. During a specific period, the total number of new users divided by the number of users you started with—the higher the number, the better because that implies lower consumer acquisition costs.
Net Promoter Score—Determine customer satisfaction and loyalty to your brand. Aim to stimulate a steady upward trend overtime to appease potential investors looking for customer loyalty.Business Metrics
Total Available Market—Before you start, ensure the market for your product is large enough. Size matters. Identify a viable market for your product that is profitable and rapidly growing. Sizable markets that are experiencing periods of high growth are prime opportunities for technologists and investors alike. Use a mix of Top-Down and Bottom-Up research to avoid *The Chinese Math* paradox.
Sell-Thru Rate—Indicate to your company’s stakeholders how your brand develops network effects by keeping track of the total number of sales in a given period divided by the number of goods you intended to sale. The goal is to show capital efficiency and increasing ‘inventory’ turnover.Financial Metrics
Revenue Run Rate—Annualized Gross Merchandising Volume is a function that reveals to what extent consumers convert into buyers through your mobile-web application. Learn to accurately predict GMV and annual recurring revenue to reflect exceptional management skills to potential investors and strategic partners.
Average Revenue Per User—Growing your audience is usually not enough to grow a business. Track how much you commercialize your consumers’ loyalty to your product by calculating average revenue per user. This metric demonstrates the value of users that your product services. Compare your ARPU with that of established companies to identify your positioning in terms of loyalty in the minds of your target audience.Investor’s Watch Metrics Quiz
Cohart Analysis Metrics
Usership—Are your users loyal? Is your audience growing? Who is your target customer?
Purchasing—How much is each user worth to your business? How long will they be customers?Retention Metrics
Traffic—How well does your lead nurturing system work? How well do you project traffic?
Active User Base—How well do you know your users? How are they organized? What do they want more of?Conclusion
Innovating business models unfolds opportunities to take advantage of commercial inventions and growing markets. As you re-think your current business model, focus on optimizing processes in creative ways using robust technology.
When you’re ready to take your idea to the next level, contact an expert at Kastha, and we’ll help develop your idea into a viable technology company.
-J. Washington Dir. R&D
Jarrad Denzel Washington, Dir R&D, specializes in technical communications and integrated digital media production. He writes articles about the technical side of startup generation and corporate innovation. Contact him with any questions regarding technical communication topics. Jarrad enjoys discussing innovating business models with entrepreneurs, core team members and future technology innovators. jarraddenzel@gmail.com